Trading In Poverty

The subsidies paid by the US and EU were brought in during the 1950s to provide a safety net for their family farmers. Those subsidies no longer do that. Most subsides in the US go to large agribusiness like Cargill and allow American farmers to sell crops for less than it costs to produce them. That not only affects world markets by forcing commodity prices down to unreasonable levels, but under NAFTA means that American corn can be sold in the Mexican market for less than it costs Mexican farmers to produce it. Domestic prices for Mexican corn have dived by as much as 70%, forcing Mexican farmers off of their land. Many have become illegal immigrants in the US south in an effort to feed their families. Others have become supporters of the Zapatista movement. Many were protesting, or trying to, at the WTO meeting in Cancun. Those meetings fell apart because developing countries would not accede to developed nations remaining dominant through subsidies and tariffs. The EU wanted to tie agricultural issues to other trade issues. The US and the EU negotiated in private with a small group of countries, then expected the poor nations to rubber-stamp the agreement. The poor nations, feeling that the deals were not in their best interests, refused. US trade representative Robert Zoellick blamed the poor nations, calling them “won’t do” nations, then said that the US would redouble efforts to sign bi-lateral agreements with favoured nations. This divide and conquer strategy is something the US has used before. Ask those Mexican farmers that have been forced off their land how bi-lateral trade agreements with US benefited them. Developed nations are reluctant to drop their subsidies for political reasons and insist that developing nations drop tariffs designed to promote local industry. In the case of the US there is also pressure to lift prohibitions against genetically modified crops. Dropping those prohibitions would take away the European Union as a potential market for developing nations while indebting their farmers more and more to US agribusiness. The American agricultural subsidies are brutal not just for farmers in poor nations, but for small farmers in the US. At the Campesino Forum that was part of the protest against the WTO meetings, some American farmers spoke out against the policies of their government. Representatives from American based organisations such as the National Family Farm Coalition and the American Corn Growers Association spoke out against not the just the subsidies paid by the US and the EU, but all policies that keep commodity prices artificially low. Why are American farmers speaking out against a system designed to benefit them? Because such subsidies do not benefit the family farmer, they benefit huge agribusiness. According to the Environmental Working Group’s Farm Subsidy Data Base there have been some odd places receiving huge subsidies from the US government. Riceland Foods tops the list receiving over $426 million in subsidies between 1995 and 2002. Cargill, thirteenth on the list, received $10,899,864 in the same period. All but $34,443 of that was paid as commodity subsidies in 2002. The top twenty percent of USDA subsidy recipients received $98,376,111,388. The remaining eighty percent received $15,648,154,355 between them. The majority of family farmers in the US fall into that bottom eighty percent. They are competing against huge companies that not only collect the lion’s share of the subsidies, but use their political pull to keep prices low. As the family farmers are forced from their land, the corporations buy up the land at, often at fire-sale prices, and grow even more dominant. The small American farmer knows exactly how those Mexican farmers at the Campesino feel. Similarly, cotton producers received over $10.6 billion in subsidies in the same period, pushing world prices downward. At the same time the US cotton industry has lobbied for tariffs on cotton and textiles to protect them from imports from developing nations and has worked to keep hemp classified as a drug, barring both its importation and its domestic planting. The US even subsidises peanuts. $1.2 billion worth of subsidies from 1995 to 2002. Another staple of developing nations. Another possible cash crop that could help those nations to modernise while feeding themselves. Another example of prices being pushed to below production costs, even in the labour-cheap developing nations. The story is the same for rice ($7,795,799,116 from ‘95 to ‘02), and soybeans ($10,967,530,537 during that same period). Basically, if a major corporation is involved in an agricultural industry, the US government is there handing out money and acting to block imports from other nations if at all possible. That twists international markets. It has a very direct and immediate detrimental effect on developing nations because their farmers are living very close to the subsistence level and are more quickly affected. It hurts the rest of us too. The prices we are paid for our crops are artificially low so our farmers suffer. People move off the land while others attempt to operate in economies of scale. Farms become larger and more expensive, equipment becomes larger and more expensive, farming methods become chemically intensive and less environmentally friendly. The small Canadian farmer, now operating with a massive debt-load and increased operating expenses, takes longer to recover from a bad year. More farmers leave for jobs in the city, others buy up their land, and the cycle continues. On October 3, the US handed down a split decision on whether Canadian farmers, via the Canadian Wheat Board, were dumping wheat in the American market. The basic American claim is the CWB, by it’s very existence, is a subsidy. Some in the US see the Wheat Board as creeping socialism; some see it as a blockade to US wheat brokers entering the Canadian market; and others see it as a danger to American agribusiness in Canada, especially since the CWB’s resistance to Roundup ready wheat entering our market. This is an issue that has come up regularly for more than a decade, and although Canada has won every case before the World Trade Organisation, the battles are expensive and duties imposed while the case is being fought hurt Canadian farmers. The US drags us back into the battle at every opportunity though. While the US is complaining that Canada is dumping wheat in their country, the reality is that they have, through their subsidy programs, brought the prices down so that wheat cannot be sold at a fair market value. Between 1995 and 2002, the US paid out over $17 billion in subsidies for wheat, but Canadian farmers are the ones doing the dumping? The EU and its member countries play basically the same game as the US. There are subsidies paid...huge amounts of money. Those subsidies go more and more to large, politically influential corporations. At the same time trade barriers are put up to protect markets from competition from developing nations. To date the results of these subsidies are prices too low to support farmers in developing nations, environmentally unfriendly farming practices in developed nations, and the increased political power of huge corporations. The continued reluctance of the US and the EU to drop their subsidy programs has already led to famines in some poor nations, and the civil unrest that accompanies such upheavals. If these policies continue, the future is even bleaker. As a handful of large corporations gain more and more control over the world’s food supply, genetic diversity becomes rarer. Crops become more and more susceptible to blights and failures. We become more and more dependent on chemicalised and mechanised farming. Prices are driven ever further downward by a glut on the world market. Poor nations become less able to compete in world markets or even feed themselves. Aid packages to combat starvation become greater. It is an entirely unsustainable system that is being forced on the world by a few select individuals that neither understand nor care about the damage they are doing. Until the system of subsidies and protectionism by wealthy nations are ended, we are just trading in poverty. --- Blair was raised in Saskatchewan and currently lives in Winnipeg, Manitoba. He comes from a long line of social activists and cried on Tommy Douglas before his first birthday. His column appears biweekly on Vive le Canada.